Transcript Dual Crises of Modern Energy

DUAL CRISES OF MODERN ENERGY
Eng. Albert BUTARE
Minister of State Incharge of Energy and Communications
RWANDA
Affecting ………..
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Burundi
DRC
Kenya,
Mali,
Madagascar,
Tanzania,
Rwanda,
Uganda,
Several other countries!
A case of Rwanda
…………… today
Status
• Growing economy constrained by high energy costs and supply
shortages
– 100% oil import dependence
– Grid power shortages since 2003 – low lake levels for hydro, growing
demand – alleviated by oil-based generation
 Negative impact on income, employment, and attracting new
investments.
 Low geographic/demographic access to electricity and other modern
fuels
 Per capita consumption electricity ~22 kWh/yr; oil ~ 12 kgoe/yr.
 High costs for the most significant fuels for the poor - Kerosene for
lighting, wood and charcoal for cooking
 Broad-based participation in, and benefits from, growth and
poverty reduction strategies limited.
Grid Supply Shortages
• Dramatic change from 2003 to 2006
– Domestic hydro generation drop by over 65%
– Imports and jointly owned hydro drop by
~50GWh
– Thermal generation from 0 to 140 GWh
• Just when oil prices have increased
~100+%
• Urban water supplies also affected (higher
cost of diesel pumping)
Met by high cost diesel generation
• Diesel now accounts for ~55+% of total
Electricity generation
• Fuel cost excluding taxes ~ US $0.70/liter
• Variable production cost ~ US $
0.20+/kWh
• High system losses ~ 35+ % (technical
and commercial) due to underinvestment
and inadequate O&M
How the burden is met
• Government rebates import duty and other
taxes on diesel for power generation
– (Self-generators still subject to tax)
• Government financed new diesel capacity
• Government lease payments for diesel
• Consumers cover the full variable cost
(so far)
What next and when?
• New investments in generation
– ~20 MW of HFO-based capacity
(IDA +GoR financing)
– 35 MW - Lake Kivu gas/power
(joint public/private venture) ~ 2007 (hopefully)
– 20 MW Rusumo Falls hydro and regional
interconnections ~ 2011
– Small hydros to the grid
• Network rehabilitation
Heavy cost of adjustment
• Growth constrained
– As also employment, tax revenue
• Impact on the poorer segments
– High electricity tariffs
– Increase in bus fares (private)
– Overall inflation (limited so far)
• Vulnerability to further oil price
increases
• More so to oil supply disruptions
Squeeze from all sides..
• Further increases in oil prices, decline in
commodity export volumes, and,
disruption in oil supplies will
– Require further tariff increases (from ~20+ US
c/kWh upwards)
– Continue to undermine export
competitiveness and growth prospects
– Raise inflation and perhaps budget deficits
Considerations……
• Creation of a ‘basket fund’ for technical
assistance and capacity building
• Creation of a ‘basket fund’ for rural and
renewable energy investments and business
development assistance
• Intervention on the short term fuel and
capacity on the rental power
• Need quicker interventions!!!
Otherwise,
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We die!!!!